Though the current business economic climate is good, there is growing sentiment that we are headed for an economic downturn. In this type of economic climate business owners often bunker down to future proof their business, however, taking the right actions during these times can make all the difference. Here are 10 tips for future proofing your business while times are still good.
1. Maximise and lock in sustainable growth
Grow or die is a harsh reality for Business Owners. In business, if you are not moving forward then you are falling behind. Healthy sustainable businesses are those who grow to a plan, however, too much uncontrolled growth can be more destructive than too little.
Some indicators that your growth is sustainable:
- You are growing to your forecasts and these are aligned with your budget and financial models.
- You are growing with reference to your industry standards.
- You have a healthy balance of organic and M&A growth.
2. Improve you and your team’s wellbeing and development
As a business leader, improvement in your wellbeing will have a big impact on your business’ health. When you are in good spirits your team also reap the benefits of you being more focused, energised and relaxed. Similarly, if your team feels good, they are more likely to be more productive, creative and dedicated to doing a great job.
Investing in your staff’s development shows you care. Provide soft skill training in addition to technical training. Work through each employee’s career path and be open about your succession plans.
3. Improve your relationships with customers and suppliers
Now is the time to invest in relationships. Maintaining strong relationships with customers and suppliers is important for building brand advocates and ensure the smooth running of your business. It is also key to giving your business the best chance of weathering downturns.
During the GFC one standout factor of businesses that survived was that they managed their supplier and banking relationships better than the ones that did not.
4. Fill the reserve barrels
In short this means making sure your business has adequate financial reserves to take a few inevitable financial hits in the future. This includes adequate provisions for bad debts, obsolete stock etc. It is a good idea to chat to your CFO and/or accountant about future proofing your balance sheet and cash flow.
5. Invest in Research and Development (R&D)
Why not be the disruptor rather than the disrupted?
If you do not have a R&D department, or are not running R&D projects, consider forming a think tank. Consider creating a think tank with your best ‘out-of-the-box’ thinkers from different areas of your business. You could also run an Innovation Olympics within your company. This is an excellent way to generate new ideas as well as a way to get your employees invested in the development of the business. There are considerable government incentives for qualifying R&D expenditure.
6. Improve your businesses visibility in your industry
Raising the profile of your business within your industry can help you attract more opportunities. It also makes your business more attractive to prospective staff. Building a profile with your competitors makes you more likely to be referred work by them if they are unable to complete a particular job themselves, as they are more likely to refer work to someone they can trust. Businesses typically grow much faster acquiring other businesses than by winning one client at a time. Good relationships with competitors leads to M&A opportunities in the future.
7. Review and minimise business risks
Every well run business should maintain a risk matrix comprising the known risks in the business, the estimated severity of the risks, and what mitigating measures are in place to minimise the severity of cost should the identified circumstances eventuate. Revisiting adequacy of insurance cover would also be wise at this time.
8. Celebrate success and make it the new reality
It is over 10 years since the GFC and some businesses are still operating on a “not to lose” (too conservative) basis when they should operate in a “run to win” mentality. When success is achieved, celebrate it. This is important because you and your team should know how it feels to win “gold” rather than being satisfied with “bronze”.
9. Invest in technology
Staying on top of the technology in your business and across your industry will help insulate your business from disruption.
Data is your information gold mine. Make sure your staff realise how important accurate data is in a digital business world and engage in data analytics to gain insights to your business and customers.
10. Terminate those projects or drop that client you really should have done years ago
Almost every business has at least one marginal contract, or a marginal client, that nobody wants to work on. If your business is in a good financial position, now is the time to give them notice. Life is too short to have to work with people who are not aligned with your business.
If you would like to discuss the most important areas of your business to focus on right now, please contact Sarah McEachern or your Nexia Edwards Marshall NT Adviser.